The National Security Case for Raising the Gas Tax

[darrelld]

http://www.defenseone.com/ideas/2014/12/national-security-case-raising-gas-tax/100599/

 

 

 

Gasoline and oil taxes raise the price of oil to consumers, but they also lower the price of oil to producers like Russia and Iran—especially if we convince our allies to raise their gasoline and fossil fuel taxes as well (which they might be willing to do, even though for many, their gasoline taxes are much higher than ours already). A basic principle from Economics 101 is that at the end of the day, taxes affect all players in a market, whoever officially pays them. For oil what that means is that although higher gasoline and oil taxes would involve some sacrifice from US consumers and US producers for the sake of national security, they are also taxes that, at the end of the day, are paid in a real way by US enemies.

One way to make an increase in gasoline and oil taxes easier to swallow is to phase those taxes in over time. Economic theory predicts that credible future gasoline and oil taxes will bring down the price of oil now. If everyone knows and believes gasoline and oil taxes will increase over time, the value of keeping oil in the ground to sell it in the future will be lower, so that oil is more likely to be put on the market now—at a lower price. And down the road, if solar power continues to get cheaper—and new ways to store power get cheaper, too—those gasoline and oil taxes in the future won’t be as painful as they would be now.

For too long, the US and many of its allies have either ignored the dangers of the world and turned inward, or have been drawn into fighting wars against dictators or terrorists funded by oil riches. One of the best ways for the US and its allies to support the valiant men and women who fight and die to defend the free world and to keep those parts of the world that are struggling towards freedom from descending into chaos is by taking high oil revenues out of our enemies’ war chests.

 

[acdii]

And what does that mean to the layman? Higher taxes lower the revenues?

[hybridbear]

I think it means that passing future gas tax increases keeps the price of oil low now which hurts the "enemies" of the USA. Then in the future when the taxes do increase the increase in the cost of gas is more palatable.

[rjent]

We are over taxed now in all walks of life. That whole article sounds like politico speak for just raping the American middle class and taxpayer even more.

 

For me, no thanks.

[darrelld]

http://www.washingtonpost.com/opinions/charles-krauthammer-raise-the-gas-tax-a-lot/2015/01/08/5b4b407c-976f-11e4-aabd-d0b93ff613d5_story.html?wprss=rss_charles-krauthammer

 

By Charles Krauthammer Opinion writer January 8 at 7:46 PM

For 32 years I’ve been advocating a major tax on petroleum. I’ve got as much chance this time around as did Don Quixote with windmills. But I shall tilt my lance once more.

The only time you can even think of proposing a gas tax increase is when oil prices are at rock bottom. When I last suggested the idea six years ago, oil was selling at $40 a barrel. It eventually rose back to $110. It’s now around $48. Correspondingly, the price at the pump has fallen in the last three months by more than a dollar to about $2.20 per gallon.

Charles Krauthammer writes a weekly political column that runs on Fridays. View Archive

As a result, some in Congress are talking about a 10- or 20-cent hike in the federal tax to use for infrastructure spending. Right idea, wrong policy. The hike should not be 10 cents but $1. And the proceeds should not be spent by, or even entrusted to, the government. They should be immediately and entirely returned to the consumer by means of a cut in the Social Security tax.

The average American buys about 12 gallons of gas a week. Washington would be soaking him for $12 in extra taxes. Washington should therefore simultaneously reduce everyone’s FICA tax by $12 a week. Thus the average driver is left harmless. He receives a $12-per-week FICA bonus that he can spend on gasoline if he wants — or anything else. If he chooses to drive less, it puts money in his pocket. (The unemployed would have the $12 added to their unemployment insurance; the elderly, to their Social Security check.)

The point of the $1 gas tax increase is not to feed the maw of a government raking in $3 trillion a year. The point is exclusively to alter incentives — to reduce the disincentive for work (the Social Security tax) and to increase the disincentive to consume gasoline.

It’s win-win. Employment taxes are a drag on job creation. Reducing them not only promotes growth but advances fairness, FICA being a regressive tax that hits the middle and working classes far more than the rich.

As for oil, we remain the world champion consumer. We burn more than 20 percent of global output, almost twice as much as the next nearest gas guzzler, China.

A $1 gas tax increase would constrain oil consumption in two ways. In the short run, by curbing driving. In the long run, by altering car-buying habits. A return to gas-guzzling land yachts occurs every time gasoline prices plunge. A high gas tax encourages demand for more fuel-efficient vehicles. Constrained U.S. consumption — combined with already huge increases in U.S. production — would continue to apply enormous downward pressure on oil prices.

[corncobs]

I like the idea behind it but do we really think it would be that easy?

[acdii]

The flaw in ANY tax increase is lack of control, meaning less than zero, of where the money actually goes. Anytime a new tax is proposed for a good cause, such as infrastructure, or the school system, anytime there happens to be a surplus, the money gets funneled into something else, which then continues to be funneled away from its original purpose, then when that surplus money is required, it is no longer there and there is now a deficit in that original plans budget, and the cry goes out to raise more taxes.

 

It is a no win situation. There is also the rise and fall of taxes. When fuel costs are low, more fuel is purchased, and tax revenue rises, When gas prices go up, fewer gallons are purchased and tax revenues fall. Introduce a 1$ gas tax, then fewer gallons will be purchased, and when fuel prices rise back to 2012-13 levels of near $4 a gallon, the cost will be $5 a gallon and will cause another failure of the mortgage system as people who were doing OK with their budget will now be forced once again to choose between getting to work and food, or paying their mortgage. I know there were many other factors involved that led to the collapse of the mortgage system, but rising gas prices did play a part in it.

[darrelld]

From Bloomberg, Jan 26, 2015, 12:02:55 PM

 

Jan. 26 -- Emirates NBD Group Head of Research Tim Fox discusses the impact of low oil prices on GCC economies with Bloomberg’s Mark Barton on “Countdown."
As the world’s oil producers wring their hands over a global glut that’s pushing down prices, evidence is mounting that Saudi Arabia is more concerned about shrinking demand.

To read the entire article, go to http://bloom.bg/1yZY3EY